Gangemi Holdings Pty Ltd v Salter & Ors
[1999] NSWSC 1004
•1 October 1999
CITATION: Gangemi Holdings Pty Ltd v Salter & Ors [1999] NSWSC 1004 CURRENT JURISDICTION: Common Law FILE NUMBER(S): 10771/99 HEARING DATE(S): 27 September 1999 JUDGMENT DATE:
1 October 1999PARTIES :
Gangemi Holdings Pty Limited (Plaintiff)
Maxwell John Salter (1st Defendant)
Jennifer Susan Salter (2nd Defendant)
Charles Delahunt Davison (3rd Defendant)JUDGMENT OF: Studdert J
LOWER COURT JURISDICTION: Local Court LOWER COURT FILE NUMBER(S) : 96/96 LOWER COURT JUDICIAL OFFICER: Mr A. O'Donohue
COUNSEL : W.J.L. Berry (Plaintiff)
J.A. Trebeck (1st and 2nd Defendants)
M.M. Macrossan (3rd Defendant)SOLICITORS: Collins Cornock & Co. (Plaintiff)
Garden & Montgomerie (1st and 2nd Defendants)
Campbell Paton &Taylor (3rd Defendant)CATCHWORDS: Appeal from Local Court; liability of principal for agreement made by agent; whether finding of actual authority available on evidence; whether findings of magistrate involved error of law; Local Courts (Civil Claims) Act, s 69(2). ACTS CITED: Local Courts (Civil Claims) Act CASES CITED: Australian Gas Light Company v The Valuer General (1940) 40 SR 126
Poricanin v Australian Consolidated Industries (1979) 2 NSWLR 419
Azzopardi v Tasman UEB Industries Limited (1985) 4 NSWLR 137
Haines v Leves (1987) 8 NSWLR 442
The Council of the Upper Hunter County District v Australian Chilling and Freezing Co. Limited (1967) 118 CLR 429
Meehan v Jones (1982) 149 CLR 571DECISION: See para 80
IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISIONSTUDDERT J
Friday 1 October 1999
10771/99 GANGEMI HOLDINGS PTY LIMITED v MAXWELL JOHN SALTER & 2 ORS
JUDGMENT
1 STUDDERT J: The plaintiff, Gangemi Holdings Pty Limited, has appealed by summons to this Court from a decision of the Local Court at Cowra and seeks in the summons the following orders:2 Under s 69 of the Local Courts (Civil Claims) Act all judgments of a Local Court exercising jurisdiction under that Act are to be “final and conclusive”. However s 69(2) provides for a limited right of appeal:
“1. An order setting aside the findings, order, verdict and judgment of Magistrate A. O’Donohue dated 8 March, 1999 in Cowra Local Court proceedings 96/96 between the parties hereto.
2. An order that verdict and judgment be entered in favour of the Plaintiff in these proceedings, Gangemi Holdings Pty Ltd.
3. Such further order(s) as the Court deems appropriate.
4. Costs.”
“(2) A party to proceedings under this Act who is dissatisfied with the judgment or order of the court as being erroneous in point of law, may appeal to the Supreme Court therefrom.”
3 Before considering the various grounds of appeal raised by the plaintiff, it is desirable to record an outline as to the nature of the proceedings in the Local Court.
4 Maxwell John Salter and Jennifer Susan Salter (the first and the second defendants named in the summons in this Court) took proceedings in the Local Court against Gangemi Holdings Pty Limited (the plaintiff in this Court) claiming damages for breach of an alleged contract of employment. Charles Davison (the third defendant named in the summons) was joined as a third party in the Local Court, and the company claimed “contribution towards or indemnity for any judgment recovered against it” in the action.
5 The Local Court action succeeded and a judgment was entered against the company for the amount claimed, namely $27,613. The third party claim failed. Hence the present summons.
6 By way of background, the plaintiff company owned and operated a rural property known as “Newry Downs” at Lyndhurst and it employed the third defendant as its manager. The first and the second defendants alleged that the third defendant, acting on the plaintiff’s behalf, engaged them to work at Newry Downs at a combined weekly wage of $780 gross. It was further alleged that the defendants were to be provided with a four wheel drive vehicle for work and personal use, fuel provided, and that they were also to be provided with accommodation. It was alleged that the contract was to be for a term of not less than two years.
7 The plaintiff denied that the third defendant had authority to employ the first and the second defendants on the terms alleged, although it was not disputed that those defendants did take up employment at Newry Downs on 1 February 1996, occupying premises the lease of which was arranged by the third defendant. The third defendant instructed the agent to arrange a lease for twelve months from 1 February 1996 with an option for a further twelve months. In preparing the lease the agent omitted to include the option, although the lessor had agreed to it. However nothing turns on this omission.
8 After the third defendant was admitted to hospital in April 1996 for a mental illness, the plaintiff informed the first and the second defendants that there was available to them only two months casual work. The first and the second defendants thereupon consulted their solicitors and looked elsewhere for employment. The damages sought in the action thereafter commenced, and in due course recovered, represented the difference between the overall value of the alleged employment terms negotiated with the third defendant, as calculated over a two year term, and the earnings of the first and the second defendants in alternative employment calculated over the same period.
9 The plaintiff resisted the claim of the first and the second defendants, denying the authority of the third defendant to enter into the agreement on its behalf. In addition, by its third party claim, it sought to recover from the third defendant any damages awarded against the plaintiff, should they succeed in their claim against it.10 The plaintiff relies upon a number of grounds of appeal which purport to identify errors of law. I propose to consider these grounds in the order in which they have been expressed and argued.
The grounds of appeal
11 In considering this ground it is desirable to identify the relevant findings expressed in the reasons for judgment of the learned magistrate. Having considered those reasons, it is clear that the magistrate did determine that the third defendant engaged the services of the first and the second defendants on the terms they alleged and as agent for the plaintiff. At p 7 the magistrate said:
Ground (a): The learned magistrate erred in law in finding that there was a valid and binding contract between the plaintiff and the first and the second defendants
12 Then later at p 8, the magistrate added:
“I reject any notion that the agreement is one between the third party [that is, the third defendant] and the plaintiffs [the first and the second defendants] or that it is void for uncertainty. I am satisfied that in its terms the contract of employment is clear and unequivocal. It was for the employment of both plaintiffs [the first and the second defendants].
I find as a fact that the third party was acting as an employee and agent of the defendant company…”
“Mr Davison was not employed as a farm hand or as a rouseabout but as a manager with the obvious confidence of Dr Gangemi. He was required to run the rural operations of the company. That extended to employing people. I am not satisfied that his illness affected his decision-making process to the extent that at the time he contracted with the Salters on behalf of the company he was acting other than in his capacity as manager. It follows that he did not act in excess of the authority the company had delegated to him.”
13 As observed at the outset, the nature of this appeal is a limited one. The plaintiff can only succeed by establishing error of law in the court below. In considering this appeal the principles defining what constitutes a question of law as expressed by Jordan CJ in Australian Gas Light Company v The Valuer General (1940) 40 SR 126 at 137-138 are in point.
14 From the passages of the judgment to which I have already referred, it is clear that the magistrate made a finding that the third defendant engaged the services of the first and the second defendants on behalf of the plaintiff and that in so doing he was acting within his authority as the plaintiff’s manager.
15 This was a finding of fact which cannot be disturbed unless there was no evidence capable of supporting it. The finding cannot be disturbed upon the basis that the finding was against the weight of the evidence: see Poricanin v Australian Consolidated Industries (1979) 2 NSWLR 419; Azzopardi v Tasman UEB Industries Limited (1985) 4 NSWLR 139; and Haines v Leves (1987) 8 NSWLR 442.
16 Azzopardi involved an appeal from the then Workers Compensation Commission at a time when an appeal lay to the Court of Appeal only to correct errors of law. In emphasising the limited nature of the appeal Glass JA, with whose judgment Samuels JA agreed, said at 155-156:
“To say of a finding that it is perverse, that it is contrary to the overwhelming weight of the evidence, that it is against the evidence and the weight of the evidence, that it ignores the probative force of the evidence which is all one way or that no reasonable person could have made it, is to say the same thing in different ways. Upon proof that the finding of a jury is vitiated in this way, it will be set aside because it is wrong in fact. Since the Act does not allow this Court to correct errors of fact, any argument that the findings of a Workers’ Compensation Commission judge is vitiated in the same way discloses no error of law and will not constitute a valid ground of appeal.”
17 Those remarks of Glass JA are apposite in an appeal such as the present one from a decision of a Local Court.
18 Whilst Mr Berry has taken the Court to evidence which was capable of supporting a finding that the third defendant had no authority to engage the first and the second defendants on the terms on which he did, it cannot be said that there was no evidence to support the findings which the magistrate here made. The third defendant was, according to the plaintiff, employed at “Newry Downs” as a “Hands on” Manager (Exhibit 8) and there was to be considered the evidence of the third defendant himself based upon his statement tendered as Exhibit 13. In that document is to be found what I would regard as the high water mark of the first and the second defendant’s case as to the terms of the third defendant’s authority. I refer in particular to the following paragraphs:
“13. During my time as farm manager at ‘Newry Downs’ [and earlier he stated he commenced his employment there in mid February 1995] I organised employment, after consultation with Dr Gangemi regarding jobs that were required to be done on the property.
14. In or about October 1995 at ‘Newry Downs’ I recall a meeting I had with Dr Gangemi who said to me words to the effect:-
‘Charles you should be able to organise employees for the jobs that need doing. You don’t tell me how to practise medicine and I don’t tell you how to run the farm’.
15. I would consult with Dr Gangemi about the general direction he had in mind for the property along with what I thought were best management practises and we would reach an agreement.
16. I recall commencing and terminating the employment of the following persons:-
Employee Nature of employment
John Wythes Sheep husbandry
John Brogan Cattle pregnancy testing
Andy Duggan (Mr Duggan Shearing and crutching
would bring 8 or 9 men with him
to shear and crutch)
Troy McFawn Bulldozer operator
Michael Fagan Hay contractor
(Mr Fagan brought 4 men)
Kelvin McGoven Nursery attendant
(including looking after
Dr Gangemi’s olive grove)
Geoffrey Spackman Farm Hand
17. These people were hired and terminated without consultation with Dr Gangemi in line with my broad management instructions.
18. In or about late November 1995 I discussed projects with Dr Gangemi which included:
(a) A complete re-fencing of all interior fences
(b) A massive lim [sic] program as this had been neglected in previous years
(c) Rebuilding the farm machinery as it had become inadequate or broken down
(d) Rebuilding silos
(e) Rebuilding or creating new cattle yards
(f) Gravelling all lane ways and roads
(g) Repairing floor boards in shearing sheds
(h) Rebuilding two bull dozers on the property.
19. I recall saying to Dr Gangemi words to the effect:
‘This is probably a five year program’
Dr Gangemi said words to the effect:
‘I would like it done in two years’
20. The two other employees on the property at the time, Les Bolton and Paul Defina, did not have the skills to undertake the work efficiently or at all.
21. After further consultation with Dr Gangemi it was agreed that these projects should be undertaken. I told Dr Gangemi that I would require assistance and that I had worked with Max Salter previously and he would be perfect to work with me on the projects.
22. I recall specifically talking to Dr Gangemi in November 1995 about Max and Jenny Salter being used in regard to the employment because of Max’s special skills. I recall Dr Gangemi saying words to the effect:
‘If the work has to be done for the long term improvement of the property then we should employ them’
23. I had several conversations with Max about his perspective [sic] employment, the exact contents of the conversations I do not recall except that I do know that I inquired of Max his then current employment arrangement and of course whether or not he was interested in moving to Lyndhurst.
24. In the first week in January 1996 I arranged for Max and Jenni Salter to come down to ‘Newry Downs’ to meet Dr Gangemi.
25. We met Dr Gangemi one morning at our residential home on ‘Newry Downs’ and I recall a lengthy discussion between Max Salter, Dr Gangemi, Jenni Salter and myself.
26. Dr Gangemi inquired of Max directly about his skills and capabilities. Whilst I heard parts of that conversation I was mainly talking to Jenny separately and cannot recall the exact conversation between Dr Gangemi and Max Salter in detail.
27. The meeting finished in the early afternoon and Dr Gangemi left.
28. That afternoon, after the meeting, I met with Dr Gangemi in the olive grove at ‘Newry Downs’ and spoke to him about Max and Jenny Salter.
29. Dr Gangemi said words to the effect:
‘He (referring to Max Salter) seems like a decent type of person. If he has the skills we should get him started on the project’
30. I then drafted that employment agreement and forwarded it to Max for his approval and signature a true copy of which is attached hereto and marked with the letter ‘C’.
31. Max and Jennifer Salter started with us in February 1996.”
19 In his oral evidence the third defendant said he had discussions with Dr Gangemi (a director of the plaintiff company) to put the Salters on as permanent employees in December 1995 and in January 1996.
20 The third defendant was tested on his statement in cross examination, and conceded in cross examination on para 16 thereof that he was not exclusively engaged in employing other permanent employees, but he did remain adamant that he did have discussion with Dr Gangemi about employing the first and the second defendants on a permanent basis.
21 I accept the submission advanced by Mr Trebeck on behalf of the first and the second defendants, and supported by Mr Macrossan on behalf of the third defendant, that there was evidence capable of supporting the finding made by the magistrate as to the third defendant’s authority. It follows, since it is not for this Court to review any finding of fact open to the magistrate, that this first ground of appeal fails. No relevant error of law has been established.22 In arguing this ground Mr Berry invited consideration of the writing signed by the first and the second defendants and by the third defendant (Annexure A to the affidavit of the first defendant, itself Exhibit 3). I set the document out in full:
Ground (b): The learned magistrate erred in law in finding that there was a valid and binding contract at all, but if there was such a contract it was only between the first and second defendants on the one part and the third defendant on the other part
23 Mr Berry submitted that the above document was void for uncertainty and could not be enforced, even assuming it could otherwise be regarded as affording support for the action by the first and the second defendants. That is a separate ground (f), to be addressed discretely later. However, assuming it afforded evidence of an agreement entered into by the first defendant and the second defendant, Mr Berry submitted that the only person against whom it could constitute an agreement was the third defendant. Mr Berry invited attention to the express inclusion of the third defendant in the document as a contracting party, and he referred to evidence of alleged statements by the first defendant to a number of witnesses as indicating that defendant’s understanding that he was contracting with the third defendant:
“4.1.96
Private and Confidential
To: Max and Jenny Salter
From: Charles Davison
Re: Terms and Conditions of Employment by Gangemi Holdings Pty Ltd and Charles Davison
1. Combined Weekly Gross Wage $780.00 @ $12.00 per hour Gross, paid fortnightly.
2. 65 hours per week to reach $780.00
Max = $12.00 per hour
Jenny = $8.00 per hour
3. Employer provides Max with 4WD vehicle for Work and Personal Use and supplies fuel for Work use.
4. Employer provides house at a maximum of $120 per week rent.
5. Max and Jenny are responsible for Phone and electricity. Employer pays standing charges on phone and electricity.
6. Employer pays industry accepted superannuation and Four weeks annual leave but employer will not pay 17% loading on annual leave.
7. Max is responsible to Charles and will be solely involved in farming, earthmoving and fabrication and servicing of equipment. Jenny is responsible to him and Charles and will be involved with Ostrich Breeding, Seed Propagation, Earthworm Production and General Home and House Duties.
8. Commencement date 1.2.96.
The above agreement between Gangemi Holdings Pty Ltd and Charles Davison (Employer’s), Max and Jenny Salter, to be effective from 1st February 1996.”
The document was signed by the third defendant under his description as “Operations Manager Gangemi Holdings Pty Ltd and Charles Davison”.
(i) According to Mr David Fagan, a vehicle salesman, the first defendant spoke to him some time after 16 March 1997 and said:
“My arrangement with Charles Davison has cost me a great deal of money because I have moved here from Tamworth. This is the second time Charles has done this to me.”
(ii) According to Mark Robson, who was employed by the plaintiff at “Newry Downs” from 26 March 1996, the first defendant said to him:
“I am having trouble with my employment agreement with Charles Davison. Charles has done this sort of thing before to me, you know.”
(iii) According to Paul Defina, the first defendant said to him, at a time after the first defendant had started to work at “Newry Downs”:
“I have a written agreement from Charles containing my job description and work conditions. I have been employed by Charles in the past.”
And later:
“I was employed to drive a truck which Charles is to buy and we are going to transport our own lime, gypsum and grains for this farm and others. I have been offered wages, a house provided and a new utility, so I am doing well.”
(iv) According to an investigator, Lesley Foley, the first defendant spoke with her in December 1996 and told her:
“…that Charles Davison had offered him full time employment, accommodation and a new four wheel drive vehicle for his sole use, he also offered Mrs Salter part time employment, all of this being drawn up into a contract. Mr Salter stated, that when he became aware that the offers and contracts had been made by Mr Davison without Dr Gangemi’s authority, he felt sorry for the Doctor .
However, as Manager of the properties, Charles Davison was representing Gangemi Holdings and he and his wife had suffered enormous financial loss by accepting the contract.
Further into the conversation, Mr Salter informed me that he had known Charles Davison for many years and was very aware that he was unscrupulous, had ripped off previous employers, was a liar and a con man, and could tell me things of Charles past that ‘would make my hair stand on end’ and would be beneficial in the case Charles was bringing against the Doctor in his Workers’ Compensation claim. He further stated, that he had worked with him previously and had been ‘ripped off’ by Charles. When I asked why he had agreed to work with Charles again given his prior experiences and awareness of Charles’s reputation, Mr Salter informed me, that as the contract was with Doctor Gangemi and not Charles himself he did not feel there was any risk.”
24 The extracts of evidence set out in (i) to (iv) above could not be regarded as concluding the issue of the liability of the plaintiff, even if the learned magistrate accepted that the first defendant said what was attributed to him. I note that each of the statements is claimed to have been made by the first defendant after the alleged agreement upon which the first defendant and the second defendant based their action, but it is also to be borne in mind that the first defendant did not accept in his evidence that he had made any of the statements attributed to him. The relevant evidence of Mr Robson, Mr Defina and Ms Foley was denied (see the transcript of evidence of 21 December 1998 at pp 35, 36, 37 and 38).
25 As to the form of the document signed by the three defendants, it named the plaintiff as a contracting party and the fact that the third defendant is also named does not, ipso facto, exonerate the plaintiff from liability to the first and the second defendants. It is well settled that a named principal is bound by a contract entered into by an agent acting within the scope of his authority. The magistrate was entitled to take into account the parties named in the document, but what was critical to a determination of the plaintiff’s liability was the issue of the third defendant’s authority as agent. The magistrate made a specific finding that there was authority in the third defendant to bind the plaintiff as considered in Ground (a), and that finding attracted the plaintiff’s liability. Since the first and the second defendants did not sue the third defendant, whether the latter would also have been liable for damages by reason of his description in and his execution of the document did not arise on the cause of action which the first and the second defendants brought.
26 In my opinion Ground (b) fails.27 This ground really overlaps with Ground (a) previously considered but Mr Berry in his written submissions has focussed upon a passage on the second page of the judgment of the magistrate where his Worship said:
Ground (c): The learned magistrate erred in law in finding that if there was a valid and binding contract between the first and the second defendants and the third defendant that the third defendant had authority to bind the plaintiff.
“I find on the evidence also that not only were they [the first and the second defendants] invited to view the property upon which they would work but there is a suggestion that Dr Gangemi, a director of the company, on behalf of the company, offered words of tacit approval to their employment during or after a luncheon held on the property ‘Newry Downs’ on or about 9 December 1995.”
28 Of course the magistrate went on to make the very positive findings to which I referred earlier when considering Ground (a).
29 Mr Berry, in developing his submission on this ground, referred to part of the first defendant’s affidavit and he also referred to extracts from Dr Gangemi’s statement, Exhibit 8. He submitted that the evidence did not establish that the third defendant showed the written agreement which he prepared to Dr Gangemi, and he also referred to evidence which the third defendant gave in the Industrial Relations Court in December 1998. The transcript of that evidence was Exhibit 19 and it appears from it that in proceedings in that court the third defendant agreed that he had a discussion at some stage with Dr Gangemi about wanting to employ the first defendant as a casual employee but later that he discussed with Dr Gangemi employing the first defendant on a full time basis. According to the transcript, the third defendant agreed with the proposition that Dr Gangemi made it clear that he did not want more full time staff but was happy to have the first defendant on a casual basis.
30 The evidence in the Industrial Relations Court was not consistent with the evidence of the third defendant in the Local Court or with the content of the statement introduced into evidence as Exhibit 13. When cross examined about the evidence that he gave in the Local Court, the third defendant repeatedly answered questioning by stating that he did not remember. The third defendant told the magistrate that he could not recollect the questions or the answers in those proceedings in the Industrial Court even though they were proceedings which he had taken against the plaintiff for unfair dismissal. In the course of his cross examination the third defendant said that he was “under heavy medication” when he gave evidence in the Industrial Court. Then after the third defendant had been cross examined by Mr Berry about his questioning in the Industrial Relations Court and the answers he gave in those earlier proceedings, the magistrate asked the third defendant the following question and the third defendant gave the following answer (T43-44 of 23/12/98):
“Q. Is there any evidence you want to give Mr Davison in relation to the points, some of which you may have taken notes of during those cross examinations, that you wanted to clarify now that you may not have had a sufficient opportunity to clarify, limited to the answers you were limited to?
A. Can I just have a look at the--
Q. Yes sure
A. --points I made? Your Worship, I think really the only issue which - I couldn’t recollect the context of the - or the questions and answers in that unfair dismissal case and had clarified that it was back in that earlier period, so I’ve read through that and I recollect that those series - those hearings did take place. I’m not denying that, it’s just that I can’t remember, and I know when it happened in the latter part of the year I was only just getting sort of back on my feet again and I don’t - I certainly can’t remember it word for word and the questions that were asked. But I do acknowledge that it happened. So that’s it.”
31 The reference to “getting sort of back on my feet again” was presumably intended to convey to the magistrate that the third defendant was then in the course of recovering from the mental illness which had led to his admission to Bloomfield Hospital in April 1996 and to his subsequent assessment by a specialist psychiatrist, Dr McMurdo (see Annexure D to Exhibit 13).
32 In my opinion the effect of the cross examination of the third defendant by Mr Berry ought to have been to influence the magistrate to approach the assessment of the evidence of the third defendant with much caution. This is particularly so by reason of what he had said in the Industrial Relations Court. Nevertheless the assessment of the third defendant’s evidence was for the magistrate to make as the tribunal of fact and this Court cannot disturb any finding of fact made by the magistrate on evidence that was available before him.
33 In my opinion Ground (c) must fail.34 It seems to me that this ground is no more than a re-statement of Ground (c), but Mr Berry in developing his submissions on it referred to the fact that the third defendant was suffering from the Bipolar Affective Disorder diagnosed by Dr McMurdo. As to this disorder, the magistrate of course had Dr McMurdo’s report before him (part of Exhibit 13). In that report Dr McMurdo explained the disorder as being
Ground (d): The learned magistrate erred in law in finding that if there was a valid and binding contract between the first and second defendants and the plaintiff, the third defendant was not acting outside the authority (if any) as manager of the plaintiff.
35 Dr McMurdo later in the report wrote of the third defendant:
“a condition with variation of mood so that the individual can swing from being quite euphoric and grandiose, through to being depressed and feeling hopeless and quite ineffectual and indecisive.”
36 Mr Berry referred to features of the evidence which it was submitted reflected a tendency in the third defendant to act erratically and without consultation or authority:
“He was almost certainly unfit for the job for much of this year [that is, 1996] and probably made decisions which were unrealistic and inappropriate because of his hypomanic mood.”
(i) In the proceedings in the Industrial Relations Court referred to earlier, the third defendant was cross examined about discussions he had had with Dr Gangemi to purchase two grassliner seeders early in 1996. One of these items was to be for the plaintiff’s use. The third defendant agreed in cross examination that he obtained a quotation for their purchase and that Dr Gangemi provided a cheque for half the deposit but that he later cancelled the order as to one of those items without prior notification to Dr Gangemi. That second machine was not on order for the plaintiff but the point was made that by the cancellation the plaintiff was exposed to a risk of some further costs associated with the order.(ii) The third defendant obtained two quotations in early February 1996, each relating to the purchase of an expensive International truck (Exhibit 15). The third defendant acknowledged that he obtained those quotations without Dr Gangemi’s knowledge.
(iii) The third defendant submitted a document dated 22 January 1996 to a Mr Price. This document was called a “proposal” for the acquisition of a property known as “Bonnie Doon” by a consortium that included the plaintiff and a then deregistered company “Werrington Agribusiness Management Pty Limited”. Whilst the third defendant said that he had had discussions with Dr Gangemi about the purchasing of more land by the plaintiff, he did not have specific instructions to commit the plaintiff to a venture to acquire “Bonnie Doon”. The cost under the “proposal”, had it gone ahead, would have exceeded $1.2 million.
(iv) The third defendant on 1 February 1996 invited Bathurst Sand, Soil and Gravel to invoice the deregistered “Werrington Agribusiness Management Pty Limited” for the cost of a tri-axle pig trailer.
37 Mr Berry submitted that all the evidence I have identified in considering Ground (d) called for the conclusion that in engaging the first and the second defendants on the terms on which he did, the third defendant was acting outside the scope of his authority. Submissions to that effect were made to the magistrate, as is reflected in the written submissions which Mr Berry placed before the Local Court. To my mind the evidence upon which Mr Berry was able to draw in addressing the magistrate was formidable indeed, but here I am expressing an opinion as to fact. Whilst such evidence highlighted the need for a cautious approach to the evaluation of the evidence of the third defendant, it remained nevertheless within the province of the magistrate to determine the issue of authority. It is not to the point whether this Court, had it been the tribunal of fact, would or would not have come to the same conclusion as the Local Court. It is not appropriate that I express a view about that. The ambit of this appeal is a narrow one and I am unable to conclude as a matter of law that the magistrate was compelled to find that the third defendant was acting outside the scope of his authority in engaging the Salters.
38 Ground (d) therefore fails.39 Mr Berry did not argue this ground discretely and it seems to me that it must suffer the same fate as Grounds (a)-(d).
Ground (e): The learned magistrate erred in law in finding that the third defendant was acting as the agent of the plaintiff
Ground (f): The learned magistrate erred in law in not finding that the terms of any contract that may have existed between the first and second defendants and the plaintiff was void for vagueness
40 I set out the terms of the document when considering Ground (b).
41 Mr Berry, in submitting that the document was void for uncertainty, made two points:
(ii) that the document made no provision for the duration of the employment.
(i) that paragraphs 1 and 2 are inconsistent;
42 Mr Berry submitted that the document is to be strictly construed. I do not consider that to be the appropriate approach. This document was prepared by the third defendant and was a layman’s document for consideration by laymen. There is no suggestion that it was subject to scrutiny by lawyers before the dispute arose between the parties.
43 In Carter & Harland - Contract Law in Australia (3rd ed.) the authors state the principle which I perceive to be relevant here in these terms:44 In Hammond v Vam Limited (1972) 2 NSWLR 16, Sugerman P said at 18:
“ [260] Difficulty of interpretation distinguished from absence of meaning . It has frequently been said that the courts will interpret the language used broadly and fairly (especially when approaching a document drafted by laymen) (see Hillas & Co Ltd v Arcos Ltd (1932) 147 LT 503 at 514; Cohen v Mason [1961] Qd R 518) and that it is their duty to place a reasonable meaning on that language unless this is ‘utterly impossible’ (Brown v Gould [1972] Ch 53 at 57; Hammond v Vam Ltd [1972] 2 NSWLR 16 at 18. See also Murphy v Wright (1992) NSW Conv R 55-652 at 59733). While it may be questioned whether the courts do in fact always avoid the temptation ‘to repose on the easy pillow of saying that the whole is void for uncertainty’ (In re Roberts (1881) 19 Ch D 520 at 529, discussed in Brown v Gould [1972] Ch 53 at 57) (alternatively described by Goff LJ as ‘a counsel of despair’) (Nea Agrax SA v Baltic Shipping Co Ltd [1976] 1 QB 933 at 948), the prevailing approach is one of upholding agreements wherever possible.”
45 Then in The Council of the Upper Hunter County District v Australian Chilling and Freezing Co. Limited (1967) 118 CLR 429 Barwick CJ said:
“The courts are always loath to hold a clause invalid for uncertainty if a reasonable meaning can be given to it. Their duty is to put a fair meaning upon it, unless this is utterly impossible, and not, as has been said ‘to repose on the easy pillow of saying that the whole is void for uncertainty’. See the cases collected in the recent judgment of Megarry J in Brown v Gould [1972] Ch 53, where his Lordship points out, citing from Lord Keith of Avonholm in Fawcett Properties Ltd v Buckinghamshire County Council [1961] AC 636, at p. 670 that ‘the point is one of uncertainty of concept. If it is impossible, on construction of the condition, to reach a conclusion as to what was in the draftsman's mind, the condition is meaningless and must be read as pro non scripto’. Megarry J, put the question in another way, namely as ‘one of linguistic or semantic uncertainty, and not of difficulty of ascertainment’ (see per Lord Wilberforce in McPhail v Doulton [1971] AC 424, at p. 457); earlier he had referred to ‘uncertainty of concept as contracted with mere difficulty of application’ (p. 57)…
In relation to commercial contracts ‘the problem for a court of construction must always be so to balance matters that, without violation of essential principle, the dealings of men may as far as possible be treated as effective, and that the law may not incur the reproach of being the destroyer of bargains’ (per Lord Tomlin in Hillas and Co Ltd v Arcos Ltd (1932) 147 LT 503, at p. 512). ‘Business men’ said Lord Wright in the same case (p. 514) ‘often record the most important agreements in wide and summary fashion; modes of expression sufficient and clear to them in the course of their business may appear to those unfamiliar with the business far from complete or precise. It is, accordingly, the duty of the court to construe such documents fairly and broadly, without being too astute or subtle in finding defects; but, on the contrary the court should seek to apply the old maxim of English law, verba ita sunt intelligenda ut res magis valeat quam pereat.’"
But a contract of which there can be more than one possible meaning or which when construed can produce in its application more than one result is not therefore void for uncertainty. As long as it is capable of a meaning, it will ultimately bear that meaning which the courts, or in an appropriate case, an arbitrator, decides is its proper construction: and the court or arbitrator will decide its application. The question becomes one of construction, of ascertaining the intention of the parties, and of applying it. Lord Tomlin`s words in this connexion in Hillas & Co. Ltd. v. Arcos Ltd. (1932) 147 LT 503, at p 512 ought to be kept in mind. So long as the language employed by the parties, to use Lord Wright`s words in Scammell (G.) & Nephew Ltd. v. Ouston (1941) AC 251 is not "so obscure and so incapable of any definite or precise meaning that the Court is unable to attribute to the parties any particular contractual intention", the contract cannot be held to be void or uncertain or meaningless. In the search for that intention, no narrow or pedantic approach is warranted, particularly in the case of commercial arrangements. Thus will uncertainty of meaning, as distinct from absence of meaning or of intention, be resolved.
46 See also Meehan v Jones (1982) 149 CLR 571 and in particular the judgment of Gibbs CJ at 578.
47 Mindful of the above statements of principle, I consider the writing in the present case.
48 According to the second plaintiff the explanation given by the third defendant for term 2 was to express a lesser rate of remuneration for the third defendant “because Dr Gangemi doesn’t like to see a woman paid at the same rate as a male”. Whether that unattractive explanation for Term 2 explains it or not, it is to be observed that once the second defendant worked any number of hours, this reduced the available number of hours attracting an hourly rate of $12, so that once the second defendant did any work at all, assuming the application of the rates stated in paragraph 2, it would not have been possible to reach $780 per week for an aggregate of only sixty-five hours of work.
49 Whether the magistrate considered the significance of this second condition, and the explanation for its introduction, when addressing the issue of the third defendant’s authority to enter into the contract for the plaintiff is not apparent from the judgment. However paragraphs 1 and 2 each provide for a combined weekly wage of $780. Paragraph 2 provides that that sum is to be paid for sixty-five hours work and sixty-five hours work at $12 per hour totals $780.
50 In my opinion it would be inconsistent with authority to strike the agreement down as void for uncertainty because of what is provided for in paragraph 2. The two paragraphs are capable of a reasonable meaning, namely that the Salters were to be paid a combined wage of $780 per week for an aggregate of sixty-five hours work.
51 Paragraph 5 provided for the manner of payment of phone and electricity charges:
“ 5. Max and Jenny are responsible for Phone and electricity. Employer pays standing charges on phone and electricity.
52 Mr Berry, in written submissions, argued that this paragraph was internally inconsistent. He did not address this submission in oral argument but in my opinion the submission is not sound. The paragraph has this reasonable meaning: that the first and second defendants were to pay consumption expenses for phone calls made and electricity used, but the plaintiff was to pay charges such as telephone service and equipment charges, including phone rental, and the service availability charge for electricity.
53 Even if, contrary to the view I have reached, this paragraph was void for uncertainty, it would not call for the entire agreement to be struck down and no claim was advanced by the first and the second defendants for damages for the failure by the plaintiff to comply with paragraph 5.
54 Finally, Mr Barry has submitted that the document does not provide for the duration of the contract of employment. Plainly this is correct. However, it does not follow that there exists no enforceable contract. A distinction must be drawn between a case where a contract fails for incompleteness because the parties have reached no agreement, and a case where agreement has been reached but not all the terms have been reduced to writing. An agreement may be enforced where the agreement is proved to be partly oral and partly written, or where it is appropriate to regard a term or terms unexpressed in the document as implied into the arrangement. In Carter & Harland - Contract Law in Australia (3rd ed.) there appears the following relevant statement of principle:55 The evidence was that the first and the second defendants were in regular employment in Tamworth when they were approached by the third defendant. The first defendant was asked by the third defendant to supply details of the then existing terms of employment of the first and the second defendants and responded by advising the third defendant that their combined wage was $780 per week and that they were provided with a house and a vehicle. The third defendant responded by advising he would consider “whether we could match your current package”. The third defendant later advised:
“ [268] Implication of terms . A seemingly incomplete agreement will often be enforced because the courts will imply in the contract terms relating to essential matters which the parties themselves have not expressly dealt with. These terms may be implied under a rule of law relating to the type of transaction in question or may be implied from the particular facts.”
56 According to the first defendant, he then said:
“I have worked it out that we can pay you and Jen $780 per week. We will find a house and we will pay the rent and we will supply a vehicle. I’ll make up a draft contract and send it by fax to you for approval.”
57 The first defendant said that the third defendant responded:
“I don’t want to finish up here unless it’s permanent work down there.”
58 The evidence I have above reviewed was set out in the affidavit of the first defendant tendered in the proceedings before the magistrate. That evidence was not challenged and I note that the magistrate obviously formed a favourable impression of the first defendant, commenting that he “gave his evidence in a clear and honest fashion”. The magistrate referred in his judgment to the circumstances in which the first and the second defendants were living in Tamworth before they went to “Newry Downs”:
“Yes, this is permanent work. We’re in for the long term. This property is 4000 acres. It’s been neglected. There is a hell of a lot of work to do. Dr Joe Gangemi has a five year programme but he has put pressure on me to get it done in two years if possible. If I’m to have any chance of getting it done in that time, I’ll need you and Jen.”
“The plaintiffs, Mr and Mrs Salter, were in permanent employment in the rural industry in Tamworth. They apparently were in a relatively comfortable situation with a house and vehicle with fuel supplied. I find on the facts that they were contacted by Mr Charles Davison, the manager of the defendant company, and were offered the opportunity to work for Gangemi Holdings Pty Limited…”
59 Consistently with the assertion that the first and the second defendants’ participation in a two year programme was being sought by the third defendant was the fact that the third defendant arranged the letting of the house to accommodate the first and the second defendants for a period of twelve months with a twelve months option. Arrangements for the letting were on the evidence made in late December or early January 1996 and the lease was expressed to run from 1 February 1996 which was the date from which the agreement signed by the first and the second defendants and by the third defendant was expressed to be effective.
60 It seems to me that on the above unchallenged evidence it was appropriate to imply into the contract a term as to its duration and that Mr Berry’s submission to the contrary must be rejected.
61 What was the term to be implied? The magistrate did not spell out his approach to this, but it is clear from the damages he assessed that he quantified damages on the basis that the contract was to be regarded as being one for two years. He accepted the claim as detailed and calculated on that basis in a document tendered on 21 December 1998 (T 2).
62 The magistrate has not stated his reasons for what he did but no ground of appeal complains of the failure to give reasons, nor as to the approach taken to the assessment of damages once the challenge to the contract on the basis of its uncertainty failed. In this regard Mr Berry’s approach on this appeal has been entirely consistent with his approach at first instance, as reflected by his written submissions presented to the magistrate and made available to this Court.
63 Having regard to the way in which the hearing was conducted at first instance and having regard to the way in which the appeal has been argued, this Court is not called upon to consider either the aptness of the implication of a term of two years which the magistrate obviously found or the manner of quantification of damages. It suffices on the issues raised on the appeal to hold as I do that the claim does not fail for uncertainty or incompleteness because no term governing the length of the employment was expressed and that the facts of this case made it appropriate to imply into the contract a term as to its duration.
64 For the reasons I have stated, Ground (f) fails.65 It was submitted that the first defendant, by reason of his prior dealings, should have been aware that the third defendant was acting erratically. Mr Berry relied on the extracts from the evidence of Ms Foley and Messrs Fagan, Robson and Defina which I set out earlier in considering Ground (b), and also upon the admissions the first defendant made in cross examination that he had known the third defendant for a long time. As I observed earlier, it was for the magistrate to assess the significance of this evidence as well as the relevant denials expressed by the first defendant in the course of cross examination. If the first and the second defendants were reliant upon ostensible authority to succeed against the plaintiff, then their awareness that the third defendant was acting erratically at the time the agreement was entered into, if proved, would have been a relevant consideration. However the plaintiff’s liability is not based upon a finding of ostensible authority but actual authority. In any event, even assuming an awareness of erratic behaviour was relevant to actual authority, the magistrate made a finding (p 4 of the judgment) that there was no evidence before him which he
Ground (g): That the learned magistrate erred in law in finding that the first and second defendants did not know or could not have known that the third defendant was acting erratically
“could safely rely on to say that the [first and second defendants] knew or ought to have known that Mr Davison was acting outside of any authority he had or was acting erratically.”
66 That finding represented an evaluation of the evidence and was a finding of fact, not a finding of law, and is not open to challenge on this appeal.
67 Accordingly Ground (g) fails.
Ground (h): The learned magistrate erred in law in not finding that, if there existed a valid and binding contract between the first and second defendants and the plaintiff, the third defendant acted outside his authority and is liable to the plaintiff for any damages suffered by him.
68 This ground is directed to the case against the third defendant and to the relief sought by the plaintiff against that defendant.
69 Mr Berry has submitted that if the first and the second defendants were entitled to succeed against the plaintiff, then the plaintiff was entitled to succeed against the third defendant on its third party claim in the Local Court. Hence in this Court, should the plaintiff fail on appeal as against the first and the second defendants, Mr Berry submits that the plaintiff would then be entitled to be indemnified by the third defendant, and that any liability for the costs of the first and the second defendant should also be passed on to the third defendant by way of Bullock order.
70 Mr Macrossan, who has appeared for the third defendant in this Court, has argued to the contrary.
71 The basis of the third party claim was not expressed in the third party notice in the Local Court but the expression of the ground of appeal makes it clear that the claim that the liability should be passed on to the third defendant is based solely upon an assertion that the third defendant acted outside his authority in engaging the services of the Salters.
72 In arguing this ground Mr Berry has relied upon the evidence relied upon and earlier considered in relation to Ground (c).
73 The magistrate did not base the plaintiff’s liability to the first and the second defendants upon a finding of ostensible authority but upon a finding of actual authority. The evidence which Mr Berry has referred to in his written submissions to support this ground was evidence to be weighed by the magistrate in determining whether the third defendant did have actual authority as he claimed. It seems to me, however, that Mr Macrossan is correct in his submission that the finding reached by the learned magistrate that the third defendant had actual authority to engage the Salters was a finding of fact that cannot be disturbed here, for the very same reasons I expressed in earlier considering Ground (a).
74 Accordingly the finding of actual authority inevitably defeats the plaintiff’s claim against the third defendant, based as it is upon a submission that no such authority existed. Hence Ground (h) must fail.
Ground (i): The learned magistrate erred in law in not finding that the first and second defendants and the third defendant had conspired to defraud the plaintiff
75 A conspiracy between the three defendants to defraud the plaintiff was not pleaded in the Local Court, although paragraph 12 of the grounds of defence to the claim of the first and second defendants did raise the issue of fraud. However, it does seem that the matter was raised in the Local Court because the magistrate referred to it in a passage in the judgment which I shall shortly record.
76 Mr Berry submitted that the very same evidence relied upon to prove awareness of erratic behaviour identified in support of Ground (g) avails the plaintiff on this present ground. However Mr Berry’s submission did not find favour with the magistrate. In considering Ground (g) I have already adverted to what the magistrate said in a passage commencing on p 4 of his judgment. For the purposes of this present ground, I continue by reciting what the magistrate said at the very foot of p 4 and on p 5:77 Plainly in the above passage the magistrate considered and rejected the notion of a conspiracy to defraud the plaintiff. The magistrate’s consideration of that issue involved an assessment of fact and as such cannot be reviewed in this Court. In my opinion it simply cannot be contended that the evidence compelled as a matter of law a finding of the conspiracy claim in Ground (i).
“Given my assessment of them [the first and the second defendants] as witnesses and their demeanour in the witness box, I cannot accept that they would forgo their employment, move from Tamworth and change course at their stage of their lives to the extent that they did on the whim of a man they suspected of being mentally disturbed. That does not accord with one’s usual experience of life. For them to have taken that course with that knowledge would result in a conclusion that they did so with a view to conspiring to defraud the company. My view is that Ms Foley’s evidence provides confirmation of the fact that Mr Salter, given previous dealings with the third party, felt decidedly comfortable on this occasion, given that he had the security of a written contract with his new employer. This is particularly so given the fact he had obviously taken a risk in leaving the security of his previous employment. I really cannot understand the vigour with which Mr Casey cross examined Ms Foley. It is my view that the witness’ evidence enhances his clients’ cases against the company in that it serves to confirm their level of satisfaction that, notwithstanding any criticism of the third party in any previous dealings, this time they had their new employment package locked in concrete.
Mr Salter gave his evidence in a clear and apparently honest fashion. I am satisfied that he at all times believed he was being employed by the company and there can be no suggestion on his evidence that he was involved in any conspiracy to defraud Gangemi Holdings.”
Conclusions and formal orders
78 It follows, since the plaintiff has failed to establish any error of law, that this summons must be dismissed.
79 It was appropriate that each defendant should be represented in this Court, and that the third defendant should have separate representation. In my opinion, costs should follow the event.
80 The formal orders of the Court are accordingly as follows:
2. I order the plaintiff to pay the defendants’ costs.
1. The summons is dismissed;
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